Iowans should look beyond the simple zero-sum analysis of income disparity

Grant and Katelyn Hobin work multiple jobs to pay off student loans while they wait to have a family.

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Katelyn Hobin and her husband Grant sing during choir practice at Westminster Presbyterian Church in Beaverdale Thursday, Nov. 16, 2017. They both work part-time jobs as section leaders in the choir.
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Middle-class wage stagnation afflicts Iowa, just as it does many places across the country. But it is not caused by “the rich getting richer,” as the Register story implies.

A more honest critique would have examined why some people are prospering, here and elsewhere, while others aren’t, and looked for reasons why.

One big culprit is Iowa’s tax code, which takes too much money out of Iowans’ pockets, stifles economic growth and does a typically bad job of picking winners and losers.

It has been more than a decade since the state has seen major tax reform.

Like the federal tax code, which hasn’t been overhauled in a generation, the state tax code fosters a two-tiered system that rewards politically connected interests with more than $400 million a year in credits, carve-outs and giveaways, and leaves the rest of us to make up the difference.

Overall, the Tax Foundation ranks Iowa 40th in the nation in tax climate. Among neighboring states, only Minnesota ranks lower.

But the corporate tax climate is even worse: Iowa ranks 48th out of 50, and dead last in the Midwest.

It’s difficult for even the hardest-working people to overcome the resistance that kind of tax regime can throw up in front of entrepreneurs and innovators, small business owners and working men and women.

Our tax code has stifled economic growth for too long, driving jobs out of the state and killing opportunities — and the dreams for a better future that go with them.

Look around at the states where job growth is booming, and you’ll see that they are mostly low-tax states that encourage businesses to relocate and expand with flatter, fairer and simpler tax laws that create an even playing field and incentivize growth.

Blaming the wealthy is a popular pastime. But if you’re looking for reasons why income inequality is on the rise in Iowa, you’re more likely to find it in the politics of the tax code than in the politics of envy.

Unfortunately, our arcane and archaic tax system isn’t the only culprit when it comes to restricting opportunity.

Iowans also face obstacles just getting started on the path toward success because of our onerous occupational license laws.

The nonpartisan Institute for Justice ranks the state as the 12th most-licensed in the nation. That means there are too many roadblocks to Iowans getting jobs and starting their own small businesses, in fields ranging from travel agent to dental assistant.

Not all the news is bad, though.

Drew Klein(Photo: Submitted)

The Iowa Legislature made progress this year by reducing regulations that impact our workforce and improving the financial outlook for the state. Reforming the state’s collective bargaining system was just one part of that progress. Those changes will improve our economic competitiveness and, not incidentally, reduce wasteful government spending. That should reduce the need for future drastic spending cuts, improve the delivery of essential services and put state government on a sounder footing. That’s all appealing to job creators.

So, there are a lot of steps our state government could take to address income disparity. Working from the assumption that economic success is a zero-sum game is not the place to start.